North Carolina
Department of State Treasurer
RICHARD H. MOORE
TREASURER
State and Local Government Finance Division
and the Local Government Commission
JANICE T. BURKE
DEPUTY TREASURER
Memorandum # 999
September 12, 2003
To:
Finance Officers of Public Authorities and Charter Schools and
Certified Public Accountants
From:
T. Vance Holloman, Director
Fiscal Management Section
Subject:
Reporting Requirements for Special Purpose Governments Under
Governmental Accounting Standards Board (GASB) Statement No. 34
Many public authorities will be implementing GASB Statement No. 34 (Statement 34) for
the fiscal year ended June 30, 2003. Most public authorities in this State are considered
special purpose governments, rather than general governments such as cities or counties.
The reporting requirements for special purpose governments vary by the types of activities
and number of programs they operate. The purpose of this memorandum is to establish
uniform reporting requirements for special purpose governments.
The reporting requirements for special purpose are discussed in paragraph 134 through 141
of Statement 34. A special purpose government that has both governmental and
business-type activities should include government-wide and fund financial statements
in their basic financial statements. A school board and most charter schools would be an
example of such a special purpose government. The reporting requirements for special
purpose governments that have governmental activities only will depend upon whether
the government operates only one or more than one program.
Special purpose governments that have governmental activities only and operate
more than one program will include government-wide and fund financial statements in
their basic financial statements. If a special purpose government that has governmental
activities only and operates only one program, the government has the option of
presenting separate government-wide and fund financial statements in their financial
statements, or presenting a combined government-wide and fund financial statement.
Government-wide amounts would be presented in one column and fund amounts in
another. A column would be presented between the two that reconciles these amounts.
Paragraph 137 of Statement 34 provides guidance in determining if a special purpose
government operates one or more than one program. A special purpose government may
provide a service that would be classified as a single program in a general government’s
statements. For instance, the operations of a health district or a mental health district
would appear in the program Human Services if provided by a county. This does not mean
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Memorandum #999
September 12, 2003
Page 2
would appear in the program Human Services if provided by a county. This does not mean
that the special purpose government operates a single program however. If the special
purpose government manages, budgets and accounts for its activities as multiple programs,
it should report multiple programs in its financial statements.
Our staff has worked with finance officers from public authorities and with the
Governmental Accounting and Auditing Committee of the North Carolina Association of
Certified Public Accountants to establish a consistent interpretation of how paragraph 137
should be applied to public authorities. It was decided that councils of governments,
mental health districts and health districts would be considered to operate multiple
programs. The complexity of operations of these units would not be properly presented if a
single program were reported. Illustrative government-wide financial statements for these
three types of units will be posted to the Department’s web site at
www.treasurer.state.nc.us . We are working with finance officers to these units to develop
consistent reporting of programs so statement users can compare the government-wide
statements of each of these types of units.
As stated earlier other special purpose governments that have only governmental
activities and operate only one program have the option of combining governmentwide and fund financial statements. These units would include regional libraries, travel
and tourism development authorities, economic development authorities and various other
miscellaneous public authorities that provide governmental services only. Illustrative
statements that present government-wide and fund amounts for the balance sheet and
income statement will be placed upon the Department’s website as well.
Special purpose governments engaged in business-type activities only would only
include enterprise fund financial statements in their basic financial statements. Examples
of these entities would include public hospitals, public housing authorities, water and/or
sewer authorities and districts, sanitary districts, mass transit authorities, airport
authorities and other public authorities that provide business-type activities only.
Some airport authorities and mass transit authorities have, in prior years, reported their
activities using governmental funds, though most of these units use enterprise funds to
account for their activities. We encourage those units that have used governmental funds
in prior years to begin to report using enterprise funds once they implement Statement 34.
All units must gather the data needed to report on the full accrual basis for the
government-wide statements. Producing governmental fund statements using a different
basis of accounting will only require additional resources from the unit and their auditors.
In addition, the statements for those units will be less comparable to similar units that
report only on the full accrual basis. However, if an entity chooses to include governmental
fund statements in their report, this office will accept those reports, assuming that all other
requirements are met
All special purpose governments also should include management’s discussion and analysis
(MD&A), the notes to the financial statements and all required supplemental financial
information in their general purpose external financial statements. Additional combining
Memorandum #999
September 12, 2003
Page 3
schedules and other supplemental schedules needed to show compliance with General
Statutes also must be included in the financial statements.
This office receives a limited number of reports from miscellaneous pension plans. These
units that are engaged in fiduciary activities only should include only fiduciary fund
financial statements in their basic financial statements. The financial statements should
include the MD&A and the notes to the financial statements. Any additional
supplementary combining schedules and other supplemental information needed to show
compliance with General Statutes also must be included in the financial statements.
Sample audit opinions for units that do not include both government-wide and fund
financial statements in their basic financial statements are available on the Department’s
web site.
All charter schools are required to implement Statement 34 for the fiscal year ending
June30, 2004. This office will prepare illustrative financial statements for charter schools
at that time. We encourage charter schools not to early implement Statement 34.
If you have any questions about this memorandum please contact Sharon Edmundson (919807-2384 or [email protected] ) or Sara Shippee (919-807-2356 or
[email protected]) .